Shell reduces 2030 emissions-cut target in shift back to core oil and gas business
(Bloomberg) – Shell Plc reduced its targets for carbon-emissions cuts in the coming decade, while maintaining the ambition of becoming a net zero company by 2050.
The change is the latest sign of a broader adjustment in plans for the energy transition among the UK-based oil majors, which have been urged by activist investors to focus on their core oil and gas businesses. bp Plc last year said it would pump more oil and gas and this decade than previously planned.
Shell now aims to reduce its net carbon intensity by 15% to 20% by 2030, compared with a previous target of 20%, according to its latest energy transition strategy update published on Thursday. The company also dropped its goal of a 45% reduction by 2035 citing “uncertainty in the pace of change in the energy transition.” Those targets are measured against a baseline of emissions in 2016.
The change reflects Shell’s move away from renewable power, following the sale of its UK and German retail business last year. Underscoring this shift back to its core fuel business, the company introduced a new target to reduce customer emissions from the use of its oil and gas products by 15% to 20% by 2030, compared with 2021 levels.
“Our focus on value has led to a strategic shift in our power business towards select markets and segments,” Chief Executive Officer Wael Sawan said in a statement. “We expect lower growth in sales of power overall. We have updated our net carbon intensity target to reflect that change.”
Shell’s spending on low-carbon energy may also slow in the coming years. The company plans to invest $10 billion to $15 billion between 2023 and 2025, $5.6 billion of which was already spent in 2023.
Emissions ambitions. Shell first unveiled its plan to become a net zero company in 2020, under then-CEO Ben van Beurden, just a few months after bp laid out similar ambitions. At the time, energy prices were in a deep slump because of Covid-19 lockdowns, prompting some speculation that oil demand had already peaked.
Those predictions proved to be unfounded, and a swift rebound in consumption combined with Russia’s invasion of Ukraine sent oil and gas prices soaring, resulting in record profits for fossil fuel producers. Since then, many shareholders in companies including bp and Shell have demanded ever-higher returns and urged a greater emphasis on more profitable oil and gas.
Under Sawan, who took over from Van Beurden last year, Shell has promised a “ruthless” focus on boosting investor returns. The company is also seeking to narrow the valuation gap with U.S. peers Exxon Mobil Corp. and Chevron Corp., which have maintained a greater emphasis on oil and gas.
Lead image: The Shell Pernis refinery in Rotterdam, Netherlands. (Photographer: Peter Boer/Bloomberg)
